On April 30, 2025, The President of Nigeria signed into law the Upstream Petroleum Operations (Cost Efficiency Incentives) Order, 2025. This order aims to reduce operating costs in the upstream oil and gas sector while enhancing global competitiveness and efficiency.
Key Highlights:
- The Order applies to lessees, licensees, and contractors engaged in upstream petroleum operations an d eligibility for incentives is contingent on achieving or exceeding annual cost reduction targets set by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
- Eligible companies can claim a tax credit incentive equal to 50% of cost savings, multiplied by the applicable income tax rate. The CEI credit is capped at 20% of tax liability and must be used within 3 years of issuance.
There may be some questions around the legal validity and enforceability of the executive order as the tax reform measures are currently progressing through the legislative process. This has sparked discussions about whether incorporating the incentives directly into the new bills might have enhanced their impact. As a result, companies need to assess to what extent they can rely on the incentives they obtain in relation to this Order.
To know more, please see our Tax Alert below:
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